It is well established in New Jersey that unloading of a truck involves the “use” of that vehicle for purposes of omnibus auto insurance coverage. When an injury occurs during unloading then, provided that the injury arose out of the unloading operations, the auto insurance policy provisions apply to the claim.
But what if the auto policy is issued out of state? Do the New Jersey omnibus insurance obligations prevail where that policy includes exclusions that would preclude such coverage? The answer boils down to whether the out-of-state policy was issued by an admitted carrier. If so, the New Jersey Deemer Statute requires the policy to be read in accordance with the State’s omnibus insurance provisions which in effect “metaphysically” endorse the out-of-state policy. To the extent that such a policy would deny coverage for an unloading injury, pertinent policy exclusions are held invalid. Significantly though, the remaining policy terms, such as policy limits, remain in effect as written.
In The Burlington Insurance Company v. Northland Insurance Company, the Hon. Dickinson Debevoise, U.S.S.D.J. of the New Jersey District Court ruled that a general liability insurer was entitled to reimbursement from a commercial auto insurer for such a claim. Northland, an admitted New Jersey auto insurer, had issued a Pennsylvania insured a Pennsylvania commercial auto policy. When Northland failed to evaluate coverage for an unloading accident that occurred in New Jersey under this State’s deemer statute, a declaratory judgment action followed.
The Court held that the Pennsylvania commercial auto policy indeed covered the unloading accident up to that policy’s full limits and that the liability insurer was entitled to reimbursement for defense and indemnification costs of its insured as well as costs incurred in the declaratory judgment.
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